Two accused firms donated to Passaic sheriff; one also sold car parts to his department

By ZACH PATBERG

STAFF WRITER |

The Record

Two businesses whose Paterson warehouses were raided in February for allegedly selling counterfeit auto parts have contributed to Passaic County Sheriff Richard Berdnik’s election campaigns, and one has been selling vehicle parts to his department for about a year.

Cypros Trading and Shipping, run by Fadi Kilani, gave $2,500 to Berdnik when he first ran in 2010 and again for the sheriff’s reelection bid this year, according to county officials and campaign contribution records.

In the past year, Cypros has sold the Sheriff’s Department nearly $5,000 worth of car parts. Berdnik said there is no connection between the campaign donations and the business Kilani’s company has done with his office.

“The decision … was based solely on cost, the only factor,” he said. “No other factor played a role at all in that decision.”

The FBI arrested Kilani, 28, of Englewood, Shashi Malhotra, 67, of Norwood, and another dealer out of Pennsylvania at their homes on Feb. 19 while agents raided warehouses in Paterson and the Astoria section of Queens. Investigators say all three were selling second-rate “designer knockoffs” at a markup by relabeling them as name-brand parts. The labels indicated the products — including brake and suspension parts, ignition coils, water pumps, wheel hubs and transmission filters — were from automakers such as Ford and General Motors. Instead, they were coming from manufacturers in China and Saudi Arabia, authorities said.

While it’s not illegal to sell aftermarket parts, passing them off as name brand is fraud, FBI Assistant Director in Charge George Venizelos said in the news release announcing the indictments.

Berdnik got another $1,000 campaign contribution from Malhotra’s company, Worldwide Auto Parts in Paterson, according to the sheriff’s office. Worldwide has had no business dealings with the Sheriff’s Department, county officials said.

On Feb. 20, the day after Kilani and Malhotra were indicted on federal charges of trafficking counterfeit goods, Berdnik returned their campaign donations.

Cypros also donated $3,000 to the Passaic County Democratic Party, according to records. Party Chairman John Currie declined to say if the money would be returned.

Kilani’s attorney, James Lenihan, insisted his client hasn’t broken any laws and his business dealings with the Sheriff’s Department have nothing to do with his company’s political contributions.

“Perhaps the county bought the parts from him because they got the best deal,” Lenihan said. “That’s free enterprise.”

None of the three dealers has done business with Bergen County departments, according to Jeanne Baratta, chief of staff to county Executive Kathleen A. Donovan. In Passaic County, Cypros has dealt solely with the sheriff’s office, for which it supplied parts used in 30 vehicles, county officials said. The department is working with the FBI to determine if any of the parts it received are aftermarket or could pose a safety risk.

Unlike parts from the original manufacturers such as Ford, many aftermarket parts, including those sold by Cypros, don’t have to meet independent federal safety standards, according to federal authorities. And warranties for aftermarket parts could be different than name-brand ones because warranties are backed by the manufacturer, not by the dealer.

Sheriff’s spokesman Bill Maer said vehicles with parts supplied by Cypros are being checked. “Every one of our inspections at this point show that none of the equipment is inferior,” he said, adding he is “confident” none of the parts will need to be replaced.

The FBI would not comment specifically on Cypros’ dealings with Passaic County. Federal investigators are still in the process of identifying customers such as repair shops who purchased the counterfeit parts.

In February 2012, Cypros joined the more than 60 vendors who vie for a share of the $178,000 the sheriff’s office spends annually on vehicle repairs and maintenance and quickly began grabbing some of the business.

John Cupoli, whose P&A Auto Parts in Clifton has been a county vendor for about a decade, said he knows most of his competitors, but had never heard of Cypros. Yet soon the company was undercutting veteran local dealers, records show, offering much lower prices for ostensibly the same quality vehicle parts. P&A was charging $65 for brake pads while Cypros was asking for $35, according to cost-comparison records obtained from the sheriff’s office.

“These bootleg guys have the ability to go out to the street and sell at drastic discounts,” said Cupoli, referring to the allegations against Kilani. “Yeah, it hurts your business.”

By November, Cypros had billed the department $6,994 for 1,678 parts. Only $4,853 was ultimately approved — after the county learned of the arrests it voided Cypros’ last invoice sent in late November for $2,140.

The purchase orders filled by Cypros were under the county’s $1,000 threshold for soliciting bids from suppliers. Instead, the department compared prices quoted by vendors as the need for parts arose, Maer said. Brand-name parts were not specified in the sheriff’s orders, just that the parts meet standards such as in durability in the case of brake pads or brightness for bulbs, he said.

The state’s pay-to-play law restricting political donors’ business dealings with government only apply when the transaction totals more than $17,500, according to the New Jersey Election Law Enforcement Commission.

Lenihan attributed Cypros’ low prices to its volume purchases and sales, and Maer said the Sheriff’s Department was given the same explanation.

“The Sheriff’s Department should not worry about whether they bought any counterfeit parts from Mr. Kilani’s operation — ever,” he said.

Cypros’ political contributions filed with the state Election Law Enforcement Commission include $3,250 to Berdnik’s predecessor, Jerry Speziale, in 2008. The company did not begin doing business with the sheriff’s office until after Berdnik was elected, according to the county. The commission tracks political donations statewide and a search of the database for Cypros and the Kilanis turned up contributions only to the Passaic County Democratic Party, Berdnik and Speziale.

Berdnik has known the Kilani family for 2½ years through various political fundraisers, Maer said.

Cypros is one of several companies the Kilani family owns and has been in business for about 40 years in the U.S. and overseas – first under Joseph Kilani and now under his son, Fadi, who took over day-to-day operations about three years ago, according to Lenihan.

Fadi Kilani, Malhotra and the third indicted auto parts dealer — Richard Dininni of Professional Parts USA in Pennsylvania – face up to 10 years in prison if convicted of the fraud charges, the FBI announcement said.

Attempts to reach the Kilanis and Malhotra were unsuccessful. A message sent after the raids to a Kilani email was returned with an automatic reply: “We regret to inform you that Cypros Trading will be closed for the month of February due to some technical issues. Thank you for your patience.”

Staff Writer John Ensslin contributed to this article. Email: patberg@northjersey.com

Two accused firms donated to Passaic sheriff; one also sold car parts to his department

By ZACH PATBERG

STAFF WRITER |

The Record

Two businesses whose Paterson warehouses were raided in February for allegedly selling counterfeit auto parts have contributed to Passaic County Sheriff Richard Berdnik’s election campaigns, and one has been selling vehicle parts to his department for about a year.

Cypros Trading and Shipping, run by Fadi Kilani, gave $2,500 to Berdnik when he first ran in 2010 and again for the sheriff’s reelection bid this year, according to county officials and campaign contribution records.

In the past year, Cypros has sold the Sheriff’s Department nearly $5,000 worth of car parts. Berdnik said there is no connection between the campaign donations and the business Kilani’s company has done with his office.

“The decision … was based solely on cost, the only factor,” he said. “No other factor played a role at all in that decision.”

The FBI arrested Kilani, 28, of Englewood, Shashi Malhotra, 67, of Norwood, and another dealer out of Pennsylvania at their homes on Feb. 19 while agents raided warehouses in Paterson and the Astoria section of Queens. Investigators say all three were selling second-rate “designer knockoffs” at a markup by relabeling them as name-brand parts. The labels indicated the products — including brake and suspension parts, ignition coils, water pumps, wheel hubs and transmission filters — were from automakers such as Ford and General Motors. Instead, they were coming from manufacturers in China and Saudi Arabia, authorities said.

While it’s not illegal to sell aftermarket parts, passing them off as name brand is fraud, FBI Assistant Director in Charge George Venizelos said in the news release announcing the indictments.

Berdnik got another $1,000 campaign contribution from Malhotra’s company, Worldwide Auto Parts in Paterson, according to the sheriff’s office. Worldwide has had no business dealings with the Sheriff’s Department, county officials said.

On Feb. 20, the day after Kilani and Malhotra were indicted on federal charges of trafficking counterfeit goods, Berdnik returned their campaign donations.

Cypros also donated $3,000 to the Passaic County Democratic Party, according to records. Party Chairman John Currie declined to say if the money would be returned.

Kilani’s attorney, James Lenihan, insisted his client hasn’t broken any laws and his business dealings with the Sheriff’s Department have nothing to do with his company’s political contributions.

“Perhaps the county bought the parts from him because they got the best deal,” Lenihan said. “That’s free enterprise.”

None of the three dealers has done business with Bergen County departments, according to Jeanne Baratta, chief of staff to county Executive Kathleen A. Donovan. In Passaic County, Cypros has dealt solely with the sheriff’s office, for which it supplied parts used in 30 vehicles, county officials said. The department is working with the FBI to determine if any of the parts it received are aftermarket or could pose a safety risk.

Unlike parts from the original manufacturers such as Ford, many aftermarket parts, including those sold by Cypros, don’t have to meet independent federal safety standards, according to federal authorities. And warranties for aftermarket parts could be different than name-brand ones because warranties are backed by the manufacturer, not by the dealer.

Sheriff’s spokesman Bill Maer said vehicles with parts supplied by Cypros are being checked. “Every one of our inspections at this point show that none of the equipment is inferior,” he said, adding he is “confident” none of the parts will need to be replaced.

The FBI would not comment specifically on Cypros’ dealings with Passaic County. Federal investigators are still in the process of identifying customers such as repair shops who purchased the counterfeit parts.

In February 2012, Cypros joined the more than 60 vendors who vie for a share of the $178,000 the sheriff’s office spends annually on vehicle repairs and maintenance and quickly began grabbing some of the business.

John Cupoli, whose P&A Auto Parts in Clifton has been a county vendor for about a decade, said he knows most of his competitors, but had never heard of Cypros. Yet soon the company was undercutting veteran local dealers, records show, offering much lower prices for ostensibly the same quality vehicle parts. P&A was charging $65 for brake pads while Cypros was asking for $35, according to cost-comparison records obtained from the sheriff’s office.

“These bootleg guys have the ability to go out to the street and sell at drastic discounts,” said Cupoli, referring to the allegations against Kilani. “Yeah, it hurts your business.”

By November, Cypros had billed the department $6,994 for 1,678 parts. Only $4,853 was ultimately approved — after the county learned of the arrests it voided Cypros’ last invoice sent in late November for $2,140.

The purchase orders filled by Cypros were under the county’s $1,000 threshold for soliciting bids from suppliers. Instead, the department compared prices quoted by vendors as the need for parts arose, Maer said. Brand-name parts were not specified in the sheriff’s orders, just that the parts meet standards such as in durability in the case of brake pads or brightness for bulbs, he said.

The state’s pay-to-play law restricting political donors’ business dealings with government only apply when the transaction totals more than $17,500, according to the New Jersey Election Law Enforcement Commission.

Lenihan attributed Cypros’ low prices to its volume purchases and sales, and Maer said the Sheriff’s Department was given the same explanation.

“The Sheriff’s Department should not worry about whether they bought any counterfeit parts from Mr. Kilani’s operation — ever,” he said.

Cypros’ political contributions filed with the state Election Law Enforcement Commission include $3,250 to Berdnik’s predecessor, Jerry Speziale, in 2008. The company did not begin doing business with the sheriff’s office until after Berdnik was elected, according to the county. The commission tracks political donations statewide and a search of the database for Cypros and the Kilanis turned up contributions only to the Passaic County Democratic Party, Berdnik and Speziale.

Berdnik has known the Kilani family for 2½ years through various political fundraisers, Maer said.

Cypros is one of several companies the Kilani family owns and has been in business for about 40 years in the U.S. and overseas – first under Joseph Kilani and now under his son, Fadi, who took over day-to-day operations about three years ago, according to Lenihan.

Fadi Kilani, Malhotra and the third indicted auto parts dealer — Richard Dininni of Professional Parts USA in Pennsylvania – face up to 10 years in prison if convicted of the fraud charges, the FBI announcement said.

Attempts to reach the Kilanis and Malhotra were unsuccessful. A message sent after the raids to a Kilani email was returned with an automatic reply: “We regret to inform you that Cypros Trading will be closed for the month of February due to some technical issues. Thank you for your patience.”

Staff Writer John Ensslin contributed to this article. Email: patberg@northjersey.com